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A Consumer’s guide to Credit Cards

If you’re looking into applying for a new credit card then you’re probably overwhelmed with choice. From balance transfer deals to credit cards that build credit, the sheer choice means that there’s a credit card that’s suitable for every type of consumer. This guide will introduce you to what’s on the market and tell you about how you can make the right choice for your financial circumstances.

Choosing the right Credit Card for your needs
Interest rates
One of the most important parts of a Credit Card deal is the interest rate. This should be the primary piece of information you pay attention to. The way in which interest rates are advertised is by way of a ‘typical’ rate; this means the average interest rate that more than 50% of people qualify for. However interest rates are only confirmed post application, and will differ depending upon your circumstances and financial history.

Monthly charges
Some credit cards may charge a flat monthly fee, these invariably offer other benefits, such as travel insurance and/or breakdown cover. Just as you would with a monthly paid bank account you should take care to weigh up the charges against the benefits of such services.

Credit Card Types
Balance Transfer deals
Balance Transfer Deals have moved away from offering 0% rates, with many offering token rates of 1% and above. However for the super savvy there are still some deals out there that can see you benefiting from a 0% interest rate for at least 6 months. If you’re looking for such a deal then a good place to start is with consumer credit comparison websites where you can compare loans, bank accounts and other financial products in addition to credit card deals.

Credit Builder Credit Cards
Credit Builder Credit Cards are a bit of a misnomer, rather than offering credit, they operate as prepaid cards. This then means that you need to ‘top up’ the card with money prior to using it. The way that such cards build credit is by way of a monthly payment; generally these tend to range from between £5 and £15. This amount, at the end of a 12 month period, then shows on your credit report as a re-paid loan. Applying for cards such as these can help those who have seriously damaged credit histories.

Credit Cards as part of your bank account package
Credit cards that are provided by the same bank that holds your bank account may offer reduced interest rates or additional benefits, particularly where you hold a premium bank account that sees you paying a flat monthly fee. It may then be wise to apply for a credit card with your banking provider prior to checking out what other credit card providers may offer.